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By Catherine Bugayong, Global Development Issue Analyst

The United States’ complaints about China have only progressively increased in volume since the economy crashed in 2008. At issue here is the exchange rate, which China holds “fixed” at 6.65 yuan to US$1.

Unlike the Chinese yuan, the US dollar and (other major trading currencies such as the euro and the Japanese yen) are on a “floating exchange rate regime:” the value of the US dollar automatically changes in reaction to demand and supply in markets. For China to place the yuan on a “fixed exchange rate regime,” it must continuously buy and hold in reserve trillions of US dollars.

These actions have the United States grumbling that China is a “currency manipulator” and that the yuan is “undervalued.” The United States argues that keeping the yuan artificially low gives Chinese exports an unfair advantage. Pressured further by the US economy’s slow recovery, the House of Representatives passed a bill that permits the US government to set up tariffs against countries that undervalue their currencies. The bill awaits approval from the Senate and a signature from the President, but what the world is really waiting for is China’s reaction. Read the rest of this entry »

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Hilary Clinton’s trip to Latin America this week has ended in disappointment after Brazil’s president, Lula da Silva, rejected U.S. pleas to support tougher sanctions on Iran. This firm stance in the face of Western pressure is not simply meant to be a slap in the face to U.S. diplomacy. Rather, it symbolizes a geopolitical power shift where an increasingly important Brazil seeks a central space for itself on the world stage – as a superpower with an equal status to other global giants.

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With the December 6 news that it plans to build twenty new uranium enrichment facilities, Iran has dealt a serious blow to hopes of peacefully resolving its nuclear standoff with the West. After months of courtship by the international community, Iran’s announcement appears to be both a rejection of the West’s advances and a signal of its intent to step up its pursuit of a nuclear program. With the US running out of cards to play, many fear that the two countries are on a collision course to military confrontation.

Much like North Korea, the consequences of an Iranian possession of nuclear bomb are dire. The Obama administration has sought to right the wrong of American Cold War policy, when the US provided its then-ally Iran with nuclear reactors in an attempt to curry favor. Preventing proliferation is a priority for the Obama administration and confirmation that Iran has a nuclear bomb would trigger an arms race in the Middle East, with heavyweights such as Egypt and Saudi Arabia seeking to counter Iranian domination in the region. An Iranian nuclear bomb would also bring Israel and Iran closer to war. Iran’s anti-Semitic leader Mahmoud Ahmadinejad has publicised his hatred of Israel so often that Israeli leaders deem a nuclear-armed Iran an existential threat. Just last year an Israeli strike on Iranian nuclear sites was narrowly averted after George W. Bush refused to give Ehud Olmert the green light. The Obama administration has since tried to convince the Israelis of the virtues of diplomacy with Iran, but the latest setback means that hawks in Israel and the US will be circling Iran with greater intensity.

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Cross-post from Labor Is Not a Commodity, by Steve O. Akoth, Labour Awareness and Resource Centre

When reports appeared in the media two years ago detailing failure in mortgage repayments in the United States, the government of Kenya alongside many others in Africa, claimed that that was a US affair.  The treasury bureaucrats and politicians were quick to reassure Kenyans that our economy was safe.  In fact, new projections of 2% annual growth were given.  But this was nothing more than the usual political talk show and regular political performance that is not uncommon in Kenya. 6a00d8341bf90b53ef0120a66fb19f970c-800wi

Our government, rather than deceive us, should appreciate that Kenyan workers know that they are part of a huge interconnected web.  When a small scale farmer in Tigoni plants runner beans to sell to Homegrown for instance, she knows that the beans shall end up in the supermarket of Mars and Spencer in the United Kingdom.  For that reason, the farmer is interested and is affected by the purchasing power of a consumer in the UK.  Similarly, a worker on the stitching line in an Export Processing Zone (EPZ) in Ruaraka, knows that the garment shall be sold off through Wal-Mart’s shelves.  The workers are therefore invested in the purchasing power of the average American who wants to buy a “cheap” designer garment from Wal-Mart.  So the shrinking global market and the resulting economic nationalism in the northern countries in the name of bailout is an important subject for the worker in Kenya and trade unions engaged in Collective Bargaining Agreement (CBA) discussions in Kenya.  In the long run, it is the working poor who experience the recession most, it does not matter whether it starts in China or the US.

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First, let me begin with an introduction: my name is Ethan Frey. I’m a senior International Politics major (+ a few minors) at Westminster College in New Wilmington, PA.  I am serving as one of Americans for Informed Democracy’s Northeast Regional Coordinators this year, with a focus on  Global Environment. There’ll be some great, exciting and substantively significant events happening through the Fall (Power Shift Pennsylvania and Copenhagen, most namely) and I’m excited to organize around them – for and against them – with you all. Thanks for the opportunity!

Now on to the G20…

Unfortunately, I was only able to roam the streets of Pittsburgh Thursday, and not Friday. I’ll set the scene: driving south into Pittsburgh signs read “road closings for G20”, “Pittsburgh welcomes world leaders”, “Use caution: police forces on high alert”, so once we get into the  city, we realize that, in reality, the streets are bare aside from what seems to be a government crackdown in a policed state.

Our first stop: the press tent to assist with an Avaaz photo-op at the Media Check-In outside Mellon Arena.  They were marketing “SurvivaBall” – the newest chic invention by the zillionaires that (attempt to) run the world.

“SurvivaBall” is the G20’s answer to the climate crisis: corporate accountability; save our CEOs.

It’s oozes satire, as the Avaaz folks attempt to display how spending 1 billion to insure the CEOs and executive directors that run the largest corporations and countries is not going to be enough.

Their message: we need to spend the money now to ensure the safety, and provide the ability for developing countries to adapt to a changing climate. International Adaptation Aid is an issue that must emerge on the political scene once the U.S. Senate returns to negotiations around a Climate bill.

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Over the last eight months, many scholars have questioned whether Africa might escape the worst effects of the economic crisis. Some have hypothesized that the continent’s limited involvement in the world economy and international financial system might insulate it from a crisis stemming from credit systems and lending markets. In March, AIDemocracy blogged about surprising economic growth in Africa thanks to heavy Chinese investment and trade (African Trade Booms as World Economy Collapses). New economic reports, however, suggest that the situation is a little more complicated than it seems.

transafrica forumOn June 18th, the TransAfrica Forum held a roundtable discussion on the impact of the economic crisis on Africa. Panelists discussed the causes and consequences of the crisis on Africa and argued over some of its potential benefits. The speakers could whole-heartedly agree on two points: first, that the crisis has and continues to affect Africans dramatically, and second, that it provides an opportunity to achieve structural change through investment in women, workers, and other marginalized groups.

After nearly a decade of steady growth rates of 5-7%, the crisis is expected to make African nations’ growth negative. More developed countries like South Africa have seen stock market crashes and jumps in unemployment, as in the US and Western Europe. Developing economies, which had previously escaped the worst effects of the crisis, are now suffering as primary export prices fall. The crisis has reached these countries not through the stock market, but through the commodities trade in raw materials on which they depend. The implications of this crisis for an underdeveloped and impoverished continent are thus quite serious.

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Guest post from Tim Newman, Campaigns Assistant at International Labor Rights Forum:

As finance ministers from the G-20 nations prepare to meet in London, reports are emerging that 425321 Western nations are ready to accept some proposals for an increase in power for developing countries in the International Monetary Fund (IMF).  The Washington Post stated this morning that “the big winner will be the developing world, with the United States, Europe and Japan offering China, India, Brazil and other emerging nations unprecedented new influence in global financial decisions.”  The notion that industrialized nations currently holding sway in the IMF have to ability to “offer” developing countries a voice in the lending policies that deeply affect their economies highlights some of the power imbalances within international financial institutions — it also brings to mind Brazilian President Luiz Inacio Lula da Silva’s controversial comments last week about the global economic crisis.

The issue of representation in the decision-making bodies at the IMF is a real concern.  Currently, Europe holds a third of the chairs in the executive board and continues to follow the “tradition” of filling the managing director position with a European while the US has veto power at the IMF due to its large voting share.  The power structure at the IMF, and other international institutions, needs to be changed, but the bigger question is how will these changes can result in a qualitative shift that promotes policies that support poor and working people globally?

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I’m sure you did a double-take when you read the title of this post. Africa? Trade? Thriving Economies?  Yes, in fact, 21st century Africa has quickly become home to some of the most bold foreign investments from rising world superpower China.

Paolo Woods, Time

Paolo Woods, Time

Removed from much of the toxic lending and faulty mortgages, African markets have been largely shielded from the momentous economic downturn now engulfing the rest of the world’s economies. A new report released by Time Magazine reveals foreign investment in Africa has reached a whopping 48 million dollars in 2006, topping the amount received in foreign aid for the first time.

Furthermore, China will become Africa’s primary trading partner this year, speeding ahead of the United States. In Kenya, for instance, Chinese investors have begun to build infrastructure, roads, and selling Chinese goods in Chinese stores. Some have even set up schools to teach Kenyans Chinese.

Some academics claim that the Chinese are undercutting African producers and embarking on a new form of colonialism in the process. Chinese good are sold at strikingly lower prices than those of African goods, diverting business from many African merchants and traders.  Others worry about over-investment in extractive industries, which filter little benefit to African communities or workers.

Yet, there is a counter argument.  Some journalists assert  that the Chinese have undertaken infrastructure projects, school-building, and development work in tandem with their business ventures.

Chinese foreign minister Yang Jiechi recently articulated the advantages of new China-Africa partnerships.

“We will continue to have a vigorous aid program here, and Chinese companies will continue to invest as much as possible. It is a win-win solution.”

The full impact will remain to be seen. For now, however, it appears as if Chinese foreign direct investment may have jumpstarted a process of growth in Africa which inefficiently implemented American aid dollars have failed to catalyse for decades.

President Obama isn’t letting go of the Bush administration’s obsession with defense spending.

Over the past month and a half, we’ve seen our new President alternate between faltering new kid on the block to strong, progressive policy maverick. His foreign policy agenda, especially with respect to foreign aid, fall somewhere in between his dual personalities of tired novice and bold social entrepreneur.

One recent development that has many international aid and foreign policy experts alarmed is Obama’s apparent continuation of sky-high defense spending. A recent article from Foreign Policy magazine reveals the economic downturn has not precluded a quickening arms race, and neither has Obama’s election into office. The magazine claims Obama has released budget figures that allocate a whopping 534 billion for the Department of Defense; Obama’s pentagon budget reportedly falls 1.9 percent above last year’s figures, adjusting for inflation. The United State’s defense expenditures still violently exceed those of China, India, Russia, and Iran, and greatly exceed funding allocation for development agencies such as USAID.

So how does this relate to foreign aid?

In the past decade, the Butroopssh administration utilized the military to conduct many foreign assistance missions, a dangerously inadequate model for aid distribution. For instance, the Bush Administration’s Commander Emergency Response Program authorized the military to provide humanitarian relief to citizens in Afghanistan and Iraq, blurring the distinction between aid workers and army officers. The 2006 National Defense Authorization act contained provisions spearheading joint Pentagon-State Department development missions. Similar military/aid ventures have been conducted in Africa as well.

It is up to Obama to dismantle this misguided, militaristic approach to foreign aid that alienates, incenses, and demoralizes civilians, not to mention fails to establish strong civil societies and solid infrastructure. According to Emira Woods, of Foreign Policy In Focus, allowing for such a fine line between humanitarian assistance and military meddling can create serious complications. While some argue that military presence ensures a peaceful and secure environment in which other goals of economic development, health, education and democracy can be met, Woods warns that “making military force a higher priority than development and diplomacy creates an imbalance that can encourage irresponsible regimes to use U.S. source military might to oppress their own people.”  For further articulation of this debate with regards to AFRICOM, or U.S. Africa Command, check out this transcript from a January episode of “Straight Talk Africa.”

President Obama ran on a platform which championed diplomacy and development as stronger, smarter tools than defense.  But if the numbers don’t match the rhetoric, where’s the change?

Nearly eighty years ago the United States experienced a decade long drought that altered the course of American history. Now we live in a time with a drought severe enough to alter the history of the world. According to a Vanguard interview on Current TV, with the United Nations Secretary General, Ban Ki-Moon, “there are fifty countries with nearly 2.7 billion people, who do not have access to water.”   In a world where our differences are shrinking, so is the most valuable resource for our survival, our fresh water supply.

According to the United States drought monitor, the state of California reported a record to near record dry spring in hundreds of locations throughout the state. The drought was so severe it prompted Governor Arnold Schwarzenegger to declare a statewide drought. In a recent report from the US government Accountability Office, “At least 36 states will experience water shortages within the next five years.” The main areas to be effected will be the Southeast, Southwest, and the Pacific west. How bad is the drought at this moment? The Colorado River no longer ruins into the Gulf of Mexico. Lake Mead has experienced a 60 feet drop in the level of water within the past three years. The Everglades in South Florida is experiencing a shift in its ecosystem as the once freshwater swamp slowly evolves into a saltwater pit. Yet, the United States is not alone.

According to the same Vanguard interview, the northern Chinese province of Hebei, (pronounced Hébĕi)  is home to more than two million people and half of the country’s production of wheat. However, the river that feeds life into the area and eventually Beijing has fallen 97% from its original capacity. The country itself is under a desertification. Nearly 2,000 sq/km of arable land turns into desert each year. Today, nearly 25% of China is a desert and one that is continuously growing everyday.

So what brought us to the breaking point? Although some climatologist lean toward global warming, other scientist and those who survived the Dust Bowl of the thirties blame ourselves. With the rapid rise in human population, the demands on necessary resources also drastically increased. Our excessive consumption of water has dried-up rivers and lakes, and has drained our reservoirs, and aqueducts. We, as a specie can not survive without water. Even the plants in which we consume need this resource. In fact the cultivation of the land is also blamed on the current global drought.

Whether is it the over-farming in the plains of China or the man-made canals that redirect runoff water in the United States, humans have altered the natural flow of water.  Our methods in farming are far out dated in which they reflect a time when water was in abundance.  However, now that we are experiencing a servere drought, our methods must adapt for the sake of our survival.  Understanding the causation of a problem and the impact it has will lead to the development of a solution.

Areas that are overwhelming effected by the shortage of water have already begun to take action.  Suburban cities in the US  have implemented restricitions on the useage of water for lawns.  Permitting alternating days dependant upon the numerical address.  In Spain where the lack of water has set region against region, water is imported from France, city fountantins have been turned off, and a desalination plant near Barcelona is being constructed to extract water from the sea.  Younger cities in the United States such as Irvine, California and Cape Coral, Florida, have constructed a reusable water system.  The recycled water is comprised of a collection of used water from homes, businesses, as well as storm runoffs.  Once it has been filtered, the water is then redistributed to be used for irrigation purposes  for crops, golf courses, wetlands enhancement, and serves as a cooling system for industries. A recycled water system is a component of the citywide water system.  Therefore dual distribution provides fresh and recycled water.  In Saint Petersburg, Florida this system has reduced portable water usage by 50%.  Imagine a similar system in operation throughout every state in the Union and the millions of fresh water that would be saved each year.

We have all witness the value of commodities such as food and energy soar within the year causing civil unrest in developing countries from the islands of Latin America to the plains of Africa.  We have been fortunate to find alternatives for these commodities.  However, for water there is no subsitute.  Each of us has a responsibility, not to consume, but to conserve.   Turn off the water when you brush your teeth, fix leaking faucets, do not water turfs.  If we do not, water will be a commodity of the wealthy as the rest of humanity slowly dies of thirst.

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